Exxon off and running with PNG LNG

By Angela Macdonald-Smith

April 29, 2014 — 9.11am

ExxonMobil has reported the early start of production at its $US19 billion ($20.5 billion) liquefied natural gas project in Papua New Guinea, paving the way for early revenues for partners including Oil Search and Santos.

The first LNG cargo is now scheduled for delivery before the middle of 2014 as a result of the early commissioning, ExxonMobil said on Tuesday.

Exxon had originally scheduled the first cargo for later this year but moved that forward earlier this year to mid-2014. The latest announcement signals the work has progressed on, or ahead of that revised schedule.

"Completion of commissioning activities and the first LNG production ensures the project remains on target for its first LNG cargo before the middle of 2014," ExxonMobil PNG Ltd managing director Peter Graham said in a statement.

Exxon said the start-up process would be carried out in a phased way, with production ramping up over the next several months from the two-train project. Work on the second LNG production line – known as a train – is progressing and production should start from that unit in the next several weeks, it said.

The PNG LNG project is the biggest single resources investment in PNG and will drive a major increase in revenues for the country. Both Oil Search and Santos have flagged that the uplift in cash flows that they will see from the project should pave the way for increased dividends to shareholders.

The project includes gas production Hides and other fields in the Southern Highlands, as well as more than 700 kilometres of pipelines, a gas conditioning plant in Hides and liquefaction and storage facilities near Port Moresby, with a capacity of 6.9 million tonnes a year. It is expected to produce more than 9 trillion cubic feet of gas over its lifetime of several decades.